Hospital Corp. of America said Thursday it is withdrawing its proposal to
lease Jefferson Parish's two public hospitals, an announcement that abruptly reshuffled the political deck in one of the highest-stakes deals in Jefferson's recent history. "This process has simply gone on for too long, with no appearance of resolution and no end in sight," HCA
MidAmerica Division President Mel Lagarde said in a brief statement. "We are not prepared to continue in this process."

The company's surprise exit made for the biggest development in the long-running lease process since September, when the selection of an operator for the two hospitals stalled amid conflicting recommendations from the hospitals' governing boards to the Parish Council. West Jefferson Medical Center wants Louisiana Children's Medical Center to lease both hospitals, and
East Jefferson General Hospital wants HCA. Ochsner Health System was the third finalist for the leases, a 30-year deal estimated to be worth at least $406 million.

Along the way, HCA has found itself in the crosshairs of council members who support Children's. Councilman Ricky Templet, for example, sought to disqualify HCA because of the company's previous legal problems. Templet followed the lead of Councilman Chris Roberts, who has attacked HCA's proposal over the past six months. Tensions boiled over in October, when HCA MidAmerica Division President Mel Lagarde angrily accused Roberts of "appalling" behavior.

Still, HCA had seemed to gain some momentum in recent weeks. The council repeatedly voted 4-3 -- with Children's supporters in the minority -- on lease-related matters in January and February. On Jan. 15, Mark Spears, Jr., Ben Zahn, Paul Johnston and Cynthia Lee-Sheng voted to defer a final vote on selecting a lessee, even as Roberts, Templet and council Chairman Elton Lagasse were ready to hand the hospitals' keys to Children's.

The latest vote to go against Children's supporters came Wednesday, the day before HCA folded its tent. Spears, who has emerged as the deciding vote, said Thursday he was not prepared to comment on HCA's withdrawal.

The same majority voted twice this month to move forward with a review of the lease proposals by Nemzoff & Co., a Philadelphia-area consulting firm, over the objections of the Children's faction. The parish executed its contract with Nemzoff this week.

HCA backers touted the Nashville, Tenn.-based corporation as the most experienced and best-resourced of the three Jefferson finalists, one with access to capital markets. It offered Jefferson more money for the lease and, as a for-profit entity, was the only one that would have paid property taxes.

Children's supporters pointed to their favorite as a non-profit that wouldn't send excess revenue to shareholders. They also noted that its local culture.

West Jefferson General Chairman Harry "Chip" Cahill could not be reached for comment Thursday.

East Jefferson General Chairman Newell Normand said he is disappointed but not surprised by the company's decision. The East Jefferson board had recently discussed the possibility of any one of the three finalists withdrawing, given the contentiousness of the process.

HCA's exit would seem make Children's the clear frontrunner for the lease. But Normand warned against choosing a "de facto winner."

What happens next is unclear. Lagasse said he wants to introduce a new resolution to lease both hospitals to Children's at the council's March 19 meeting, although he said he would confer with colleagues before doing so.

Normand and the East Jefferson board's opposition to Children's is based partly on their lack of certainty that Children's can steward the Jefferson hospitals while it manages University Medical Center, which is set to open in downtown New Orleans next year. Normand noted that federal regulators have not yet approved the state's deal with Children's on UMC.

The purpose of privatizing, Normand said, is to create economies of scale, and joining the Children's system defeats that purpose because as of now it runs only one adult-care hospital, Touro Infirmary.

"We don't see that a one-adult care-hospital does a lot for
us, or a Charity hospital in addition to that," Normand said.

Asked whether he would continue to lead the East Jefferson board if the Parish Council selects Children's at its next meeting, Normand said "I'm not sure." But he added that he has a "fiduciary obligation" to make sure a lease transaction is successful, "no matter what my personal feelings are."

"If they in their wisdom choose that partner, we need to make it work," Normand said.

HCA, Children's and Ochsner were chosen from a pool that originally included 17 hospital operators interested in the lease. With the help of Chicago area consultants Kaufman Hall & Associates, the hospital boards narrowed the field to six then three.

Zahn said he's inquiring with parish attorney Deborah Foshee's office as to whether the council may reconsider the three operators that didn't make the final cut. Normand said he supports opening the field to additional competitors.

Nemzoff, the parish's latest consultant, said reopening the field would be a "significant mistake."

"That would be a really bad idea. They obviously had a reason for narrowing it down to three
bidders," Nemzoff said. "For the sake of the health care community, the doctors,
nurses, employees, I would never open up the bidding process at this point."